CAG asks oil ministry to explain steps taken on falling KG-D6 gas production

The CAG has said the technical reports have indicated that the operator has not fulfilled its obligation on well drilling

The Comptroller and Auditor General has asked the Ministry of Petroleum and Natural Gas (MoPNG) to explain the steps taken by it to ensure that Reliance Industries Ltd (RIL) complies with the gas production target from the KG-D6 fields.

In a letter to the ministry, the statutory auditor has said the technical reports have indicated that the operator has not fulfilled its obligation on well drilling. It has asked the ministry to explain “whether the government has ensured that the operator delivers gas according to the approved production profile” at the price of $4.2 a  million British thermal units (mBtu) in view of the shortfall in gas production due to non-compliance with the production sharing contract provisions and the addendum to the field development plan by the operator.

CAG said that the current production level from D1-D3 gas field is much less than the management committee approved production profile. The average production level during the 2010-11 was 48.13 million standard cubic metres a day (mscmd) and during 2011-12, it came down to 35.33 mscmd.

The auditor has requisitioned documents relating to integrated performance assessment of KG-D6 development facilities at the production level of 80 mscmd. RIL had carried out an integrated performance assessment on December 24, 2009, for development facilities of D1 and D3 gas fields up to the delivery point.

While RIL produced about 40 mscmd in 2009-10 against the approved production profile of 28 mscmd, KG-D6 production averaged 35.3 mscmd in 2011-12 against 61.88 mscmd and is currently a mere 14 mscmd against the projected 80 mscmd.